The British pound has fallen a bit during the trading session on Wednesday, reaching towards the ¥135 level. At this point, the market is likely to see a lot of back and forth due to the latest headlines, as the market has shown quite a bit of concern when it comes to fiscal stimulus and the overall health of the global economy. Remember, the Japanese yen is a major safety currency, and as such will be attractive to those looking to bail out on riskier assets. The British pound did get hit just a bit due to the breakup but at the end of the day it was simply the Bank of England catching up with other central banks.
GBP/JPY Video 12.03.20
All things being equal, the gap above and the 200 day EMA should both offer plenty of resistance, and therefore signs of exhaustion could be sold into. It should be noted that the market is currently looking at all possibilities of a recession, and that generally will send this market lower. With that being the case, I still favor the downside by we have made a little bit of a recovery over the last couple of days. In other words, I believe that the volatility is going to get worse, not better. Fading rallies will continue to be the way I trade this market, but I am not looking for major moves, at least not ones that I would be hanging onto for big gains.